tv CBS Evening News With Scott Pelley CBS May 22, 2012 6:30pm-7:00pm EDT
& >> pelley: tonight what wall street didn't tell investors before they bought facebook. >> there's no debating, this is a misadventure of epic proportion. >> pelley: anthony mason on the facebook fiasco. the first private ship heads to the space station. we'll talk to the entrepreneur who launched it. how much of your personal fortune have you poured into this? >> $100 million. pelley: an auction house is selling what it claims is the blood of ronald reagan. >> outraged. pelley: and one year after the tornado, ben tracy tells us joplin is preparing for the next one. captioning sponsored by cbs this is the "cbs evening news" with scott pelley. >> pelley: good evening.
facebook is all about sharing information, but it turns out that banks did not share all that they knew about the company before investors spent billions of dollars on its stock. stock that has been falling in value since the day it went on sale. facebook shares lost nearly $3 today to close just over $31. the stock was supposed to be priced so that it would go up, but it hit the market at $38 and now it is down 18%. the company's value has plummeted from $104 billion to less than $67 billion, a loss to investors of more than $37 billion so far. so what went wrong? here's anthony mason. >> mason: two weeks ago while facebook founder mark zuckerberg was out touting his new stock and banks backing the deal were raising the offering price, some of those same banks were quietly cutting revenue forecasts for
the company. at morgan stanley, the lead firm on the offering an analyst reportedly scott dewitt sent out a cautionary note that facebook's outlook was weakening but only to a select group of the bank's top clients. >> this should not have happened. absolutely not. i mean there's no debating this is a misadventure of epicñi proportion. >> mason: this economist and senior analyst with greencrest capital. >> the real issue is that morgan stanley didn't tell everyone. >> absolutely. it's either everyone or no one. if there were voices of skepticism especially seeing how things have gone, i think everyone should have heard those. >> mason: massachusetts officials today subpoenaed morgan stanley over the analyst's facebook report. in washington the sec chairman said... >> there are issues that we need to look at specifically with respect to facebook. >> mason: banks underwriting a stock offering generally are barred from issuing written recommendations until 40 days after it starts trading.
>> this was supposed to be the chance to restore the public's faith in the public markets and in wall street. instead it's been a reminder of everything people suspected, feard or hated about public markets and wall street. >> mason: morgan stanley, in a statement tonight, said it acted in compliance with all applicable regulations. but one veteran of the ipo market called this a travesty. facebook, he said, has become a laughing stock. >> pelley: anthony, investors who got in on the ground floor are now headed for the basement. is this the worst initial public offering ever. >> mason: maybe the worst high-profile one we've seen. there's been a black eye for just about everyone involved. first of all for facebook itself, for the nasdaq that had technical problems at the opening and said it shouldn't have opened the stock. now the banks as well. the biggest losers, of course, investors. >> pelley: anthony, thanks very much. the losses from a risky investment by j.p. morgan chase originally estimated at $2 billion have climbed to more than $3 billion so far.
now three federal agencies are investigating and nancy cordes is on capitol hill with that. nancy? >> reporter: scott, the chairs of two of those agencies explained for the first time today the focus of their probe. they want to know whether j.p. morgan chase told the truth to investors andñi regulators as ts complicated bet was going south. sec chairwoman mary shapiro described the investigation to members of the senate banking committee. >> clearly our focus right now is on whether the company's public disclosure and financial reporting is accurate. >> what did they know inside? when did they know it? and what should they have divulged. is that correct? >> exactly. reporter: the size of the loss was made public by jap morgan chase ceo jamie dimon on may 10. just three weeks earlier in a conference call with investors he dismissed concerns about the bank's risky trades calling them, a quote, tempest in a teapot. >> i was dead wrong when i said
that. >> reporter: dimon now says he was misinformed about the scale of the losses that were already piling up in the bank's london office. it's against the law to knowingly mislead the public about the health of a company. >> obviously i didn't know or i never would have said that. when the reason became public was because we wanted to say, you know what? we told you something was completely wrong a mere four weeks ago. >> reporter: the banking committee has called on dimon himself to testify next month. he has repeatedly said he wants to cooperate but that hearing, scott, will be an interesting sight because the biggest campaign donor to many members of the banking committee is j.p. morgan chase. >> pelley: we'll be watching that. nancy, thank you very much. america's space program was transformed today when a rocket, built by a billionaire businessman, lifted off in florida. for the first time, a privately owned and operated space craft is headed to the space station. here's mark strassman.
>> and launch of the space-x falcon 9 rocket as nasa turns to the private sector to resupply the international space station. >> reporter: space-x hopes this morning's successful launch will push private enterprise deeper into space as a for-profit marketplace. nasa retired its shuttle fleet last year and the obamaed administration wants private aerospace companies to provide basic transportation to get astronauts into orbit. in a 2010 test flight, space-x launched a capsule into orbit and retrieved it, the first time a private company had achieved that feat. today's mission will be another first. a commercial space craft flying all the way to the international space station. on friday, the dragon capsule was stopped within 30 feet of the station, each of them moving 17,000 miles per hour in low-earth orbit. that's five miles a second. the station's robotic arm will grab the capsule, dock it and the station's crew will unload
its supplies. charles bolden is nasa's administrator. >> there's a lot of work ahead to successfully complete this mission, we're certainly off to a good start. >> reporter: in this new space race a handful of companies are competing to build what amounts to a rental car to the space station. nasa will narrow down the competitors to one or two this summer. at its factory near los angeles, nasa and space-x have already invested more than $1 billion in the project. muck, a billionaire entrepreneur, founded space-x. >> people had legitimate concerns because there is no... there's no precedent for what we're doing here. we really at the dawn of a new era of space exploration and one where there's a much bigger role for commercial space companies. >> reporter: space-x hopes to launch its first manned test flight by 2015. scott, nasa says based on current budgets the earliest it would be able to certify the private space craft that's safe to fly astronauts would be 2017. >> pelley: later in the
broadcast you're going to meet the man who has done what critics said was impossible, elon musk. >> this is a tricky business: i wish it wasn't so hard. >> pelley: history is about to be made in egypt as well. a country that has been run by pharaohs, kings and dictators will hold its first free presidential election tomorrow. it will mean a lot to america's role in the middle east. elizabeth palmer is in cairo. >> reporter: here's something egyptians have never seen before: a real presidential candidate in a genuine political race that has huge implications for the middle east. this is amrr moussa one egypt's former minister under president hosni mubarak and a diplomat well known in washington. we caught up with moussa, now 75 years old, on the campaign trail. in contrast to other devoutly religious candidates he's running on a secular platform.
you're not even bothering to try and appeal to religious egypt? >> no. reporter: even in this majority muslim country, his strategy may pay off. one fan forced his way on to the bus to tell moussa those fundamentalists are driving us crazy. you'll make a great president. in some cases, the enthusiasm or you might say frenzy is for the candidate himself. but some is just the excitement of a real democratic choice after 30 years of dictatorship. egypt is really gripped by the drama of this election. in fact, people are talking of little else. especially whether to vote for the old guard or the new and crucially whether to vote for an islamic candidate or not. like this man who used to lead the powerful muslim brotherhood, banned under the old regime. but he is an it islamist with a
modern twist. he quit the brotherhood to run as an independent to attract the broadest possible support. "we need to bring all egyptians together," he told us" to achieve real democracy." at a rally in cairo, he didn't just talk about a broad base. he paraded it. on stage his inner circle included fundamentalist muslims, christians, sports idols, women, and a pop singer who launched into the national anthem and was joined by a crowd desperate to believe that tolerance can repair their battered country. >> pelley: elizabeth palmer is joining us from cairo. liz, the man who ran that battered country for 30 years, mubarak, i wonder what became of him. >> well, after he stepped down a year-and-a-half ago now, he was charged with killing some of those protestors.
and he's been on trial for many months. he showed up in the courtroom last time in february on a stretcher. he's said to be ill. in fact, the verdict in this trial is due to come next week. >> pelley: we'll be watching. liz, thanks very much. how joplin, missouri, is rebuilding one year after the tornado. a u.s. airways flight is diverted after a security scare. and outrage over an auction of what is said to be the blood of a former president when the cbs evening news continues.
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>> there would have been no chance whatsoever of me getting out. i would have been blown to kingdom come. >> reporter: hundreds of was frame homes are going up all over town, but helen's will be stronger than most. >> i say concrete. i don't want no concrete house. the more i looked at it, i said, well, i go for it. >> reporter: you've got 10-and-a-half inches of foam on either side of six inches of concrete. >> reporter: george van hoesen is building helen's house in joplin. the exterior walls are made with twisted metal bars and filled with concrete. they are designed to withstand winds of up to 250 miles per hour. when strong winds hit the side of a house they create an updraft. that often tears off the roof. so in these homes the gables are concrete as well. in a tornado or a hurricane it's flying debris that causes the most deaths. >> 3, 2. reporter: to study the dangers, researchers at texas
tech fired a 2x4 with the force of 100-mile-per-hour winds at various wall types. only reinforced concrete was impenetrable. >> the people that own these will come outside their home if there is another tornado and say, where's the rest of the neighborhood? >> reporter: not everyone can afford these homes. they cost 5 to 10% more so the city of joplin is requiring that every new home have hurricane straps. metal bands that secure the roof to the rest of the house and foundations must be filled with concrete. helen is grateful for the peace of mind she's found inside her new walls. >> i'm just starting over. i may be up in age but i can eacel start over. >> reporter: a lot of folks moving on here in joplin. 4,000 homes were destroyed in the tornado. two-thirds of the residents of those homes have taken out permits to rebuild. as for helen's house, this is it right here. as you can see it's almost done.
she plans to move in later this week, scott. >> pelley: good to see the progress, ben. thank you very much. there was a security scare today that forced a u.s. airways flight from paris to charlotte north carolina to divert to maine. a french citizen from cameroon told the crew that she had a surgically implanted device which the crew feared might be a bomb. the plane landed safely. no device was found. sources are telling us that the woman appeared to be mentally unstable. ronald reagan's family is condemning the auction of what is said to be the late president's blood. that story up next. but with advair, i'm breathing better so now i can take the lead on a science adventure. advair is clinically proven to help significantly improve lung function. unlike most copd medications, advair contains both an anti-inflammatory and a long-acting bronchodilator,
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low magnesium levels have been seen with nexium. possible side effects include headache, diarrhea, and abdominal pain. other serious stomach conditions may still exist. talk to your doctor about nexium. >> pelley: collectors spend big money for presidential memorabilia, but what's being offered by a british auction house, you might think goes beyond bad taste. it is said to be blood from the late president ronald reagan. and bob orr tells us it's open for bids until thursday. >> reporter: the anonymous seller says the vile of blood was drawn from president reagan the day he was shot 32 years ago. the on-line auction posting notes the blood was to be examined for lead level. a five-inch glass tube carries the president's name and the last name of his doctor, aaron. the label has the designation 4 meaning mr. reg want as a patient with a chest wound. it's stamped with the date of the shoot, march 30, 1981.
the overseas auction house says traces of dried blood are clearly visible in the tube and bidders are interested. the price is approaching 9200 pounds, nearly $15,000. john heubusch is the executive director of the reagan presidential foundation. >> i don't know that a reaction could be anything other than outraged. this is not baseball cards. that are being sold on the internet. this is the blood of the 40th president of the united states, ronald reagan. >> reporter: the seller says the vile of blood has been in his family for 31 year. his mother, then an employee of the lab, brought it home about a week after the assassination attempt. the auction house has offered no proof that it actually is president reagan's blood. historian douglas brinkley says that's just one of the problems. >> taking the presidential memorabilia notion to a very bizarre new level. >> reporter: very personal presidential memorabilia is nothing knew. facial hairs were plucked from lincoln after his death and worn
in his honor. hair clippings from john f. kennedy sold for $3,000 in 2010. just the year before, a locket containing hair from george and martha washington brought more than $7,000. but brinkley says this is different. does this have any historical value at all to you? >> i think it has zero historical value. i think this will create an outrage and hopefully the public clamor will be such that an item like this will be pulled off the market. >> reporter: so far that's not happened. scott, there are potential legal questions about whether or not the sale might break medical privacy laws. >> pelley: bob, thanks very much. now history in baseball. an amazing instant replay at last night's reds-braves' game in cincinatti. look at this. in the fourth inning, reds' pitcher mike lee homerd to left field. nice catch by the fan. next batter, zach cozart and another home run caught by the same guy.
20-year-old caleb lloyd. we checked with statisticians who tell us the odds of this happening cannot be calculated. a man who admits he knew nothing about rockets is writing america's next chapter in space. his story when we come back. and a choice. take advil now and maybe up to four in a day. or choose aleve and two pills for a day free of pain. way to go, coach. ♪
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>> pelley: only four entities have put a space capsule in orbit and brought it back. the united states, russia, china, and elon musk. it's musk's company, space-x that launched the capsule to the space station today. he is a man who does things that others say are impossible. recently for "60 minutes" we sat down with today's man of the hour. >> i think we're at the dawn of a new era. i think it will be very exciting. what we're hoping to do with space-x is to push the envelope and provide a reason for people to be excited and inspired to be human. >> pelley: elon musk is 40 and worth about $2 billion. as a teenager, he wrote computer games in his native south africa before heading to the u.s. and starting pay pal. >> ladies and gentlemen, mr. elon musk. >> pelley: he built an electric car company called tesla, but his passion is space.
now, tell me what's that big piece right up there? >> that's the second stage of the rocket. >> reporter: musk's california factory is is filled with young engineers and nasa veterans. he plans to cut the cost of space flight by 90%. >> coming into the rocket business not knowing anything about rockets, not having ever built anything, i would have to be insane if i thought the odds were in my favor. >> reporter: why even begin? when something is important enough, you do it even if the odds are not in your favor. >> reporter: we came across a dragon capsule like the unmanned one that is now headed to the space station. the first thing we noticed were the windows. people don't put windows in cargo ships. >> that's right. exactly. >> reporter: what that tells me is that this was never intended to be a cargo ship. >> the dragon was always designed to carry astro gnaws. >> reporter: eventually it could hold seven seats, but there are critics including space heroes who doubt the safety of a private company. >> now is the time to overrule
this administration's pledge to mediocrity. >> reporter: neal arm armstrong, gene cernan have both testified against commercial space flight and the way you're developing it. i wonder what you think of that. >> i was very sad to see that. because those guys are... you know, those guys are heroes of mine so it's really tough. >> reporter: they inspired you to do this, didn't they? >> yes. reporter: did you expect them to cheer you on? >> i was hoping they would. reporter: what are you trying to prove to them? >> what i'm trying to do is to make a significant difference in space flight and help make space flight accessible to almost anyone. i would hope for as much support in that direction as we can receive. >> reporter: musk's dragon capsule is scheduled to dock with the space station on friday. and that is the cbs evening news for tonight. for all of us at cbs news, all
around the this is 9news now. >> tonight, heavy rain asks swollen rivers closed roads, even forcing the evacuation of people living near the dam. but the worst may be over. peggy fox is in manassas where the flood waters are now receding. >> this spot here along piper road near the manassas station is a good spot to show how fast flood waters come and go. earlier today, i could not have stood here because water was this high. a man did try to drive through it and he had to be rescued by boat. tonight, authorities are keeping a close eye on the river and the lake jackson dam. just one night of pounding rains pushed lake jackson dam to an alert level.